Concept of Business in Islamic Perspective
ECIE603002 Islamic Business
Dr. Evony Silvino Violita, Ak.,CA.
Shariah
Allowed
Forbidden
The importance of Shariah in Business
Guidance of business
Syariah Overview
Sumber
• Al-Quran
• As-Sunnah
• Ijma’
• Qiyas
• Ijtihad
• Istihsan
• Maslahat
• Urf
Tujuan
• Menjaga agama
• Menjaga Jiwa
• Menjaga Akal
• Menjaga Keturunan
• Menjaga Harta
Hukum
• Wajib
(diperintahkan)
• Mandub
(disarankan)
• Haram (dilarang)
• Makruh (tidak dianjurkan)
• Mubah
(diperbolehkan)
Business in Islam
Conventional
• Focus only on the economic growth and material return
Islamic system
• Equal emphasis on the thical, moral, social. And religious dimensiona to ensure justice, equality, and fairness for the good society as a whole
Prohibited transactions in Islamic Business:
1. Riba (‘usury)
• Literally means excess, incfrement, expansion, growth.
• unjustified increment in borrowing or lending money or in exchanged goods of the same kind in different
quantities.
• 12 Quranic verses dealing with Riba
• The word riba occurs 8 times, 3 times in 2:275 and one time each in 2:276, 2:278, 3:130, 4:161 and 30:39
Example:
A borrow AUD1,000,000 and should pay interest 5% annually. Hence, A should pay 50,000 extra in one year. Interest of 5% is riba.
B barter of orange of 1 Kg with 1,3 Kg to C eventhough it has different quality.
0,3 difference is riba.
Rationale of Prohibiting Riba
•Riba is a cause of injustice and exploitation Riba leads to the creation of materialistic society
Riba discourage productive work
Riba impedes healthy economic development (encourage security oriented rather than growth oriented)
Riba increases the disparities in income and wealth
Financial intermediary Surplus units:
• Individual
• Institution
• Government
Deficite units:
• Individual
• Institution
• Government
Bank’s liabilities Bank’s assets
Bank Deposit and
investment
Return:
interest
Funding
Principle +
return (interest)
Conventional Bank
Example…
Basic concept: lending and borrowing money with interest as the return
وُﻘﱠﺗٱ ْاوُﻧَﻣاَء َنﯾِذﱠﻟٱ ﺎَﮭﱡﯾَﺄٰٓـَﯾ ِﻣ َﻰِﻘَﺑ ﺎَﻣ ْاوُرَذ َو َ ﱠﻟﻠہٱ ْا
ْا ٰٓوَﺑﱢرﻟٱ َن
ۡﻔَﺗ ۡمﱠﻟ نِﺈَﻓ َنﯾِﻧِﻣ ۡؤﱡﻣ مُﺗﻧُﻛ نِإ ۡرَﺣِﺑ ْاوُﻧَذۡﺄَﻓ ْاوُﻠَﻌ
ِ ﱠﻟﻠہٱ َنﱢﻣ ٍ۬ب
ۡمُڪَﻠَﻓ ۡمُﺗ ۡﺑُﺗ نِإ َو ۖ ۦِﮫِﻟوُﺳَر َو َﺗ َﻻ ۡمُڪِﻟٲ َو ۡﻣَأ ُسوُءُر
َنوُﻣِﻠ ۡظ
َنوُﻣَﻠ ۡظُﺗ َﻻ َو
O you who believe! Observe your duty to Allah, and give up what remaineth (due to you) from usury, if you are (in truth) believers. And
if you do not, then be warned of war (against you) from Allah and His messenger. And if you repent, then you may have your principal
(without interest). Wrong not, and ye shall not be wronged.
(Al-Baqarah: 278-279)
Hadith about Riba
ﷲ َلوﺳر ﺎﯾ ﱠنُھ ﺎَﻣ َو ،ﺎﻧﻠﻗ ،ِتَا َ◌ َقِﺑ ْوُﻣﻟا َﻊْﺑ َ◌ ّ◌ َ◌ َ◌ َسﻟا اوُﺑِﻧَﺗْﺟِا لﺎﻗ ؟
َﻗ َ◌ َو ُر ْﺣﱢﺳﻟاو ِﻟﻠہﺎِﺑ ُكْرﱢﺷﻟا : ُلْﺗ
ُلْﻛأ َو ،ﺎَﺑﱢرﻟا ُلْﻛأ َو ، ﱢقَﺣﻟﺎﺑ ًّﻻإ ُﷲ َمﱠرَﺣ ﻲِﺗﱠﻟا ِسْﻔﱠﻧﻟا ِف ْﺣﱠزﻟا َم ْوَﯾ ُﻲﱢﻟ َوﱠﺗﻟاو ،ِمْﯾِﺗَﯾﻟا ِلﺎَﻣ
َق َو ، ُفْذ َ◌
ِتﺎَﻧِﻣ ْؤُﻣﻟا ِتﻼِﻓﺎَﻐﻟا ِتﺎَﻧَﺻ ْﺣُﻣﻟا
"Avoid the seven grave sins". The companions asked: "And what are they, O Messenger of Allah?
He said: "They are: associating others with Allah, engaging in magic, killing a forbidden human soul without a legal right, devouring riba, devouring the wealth of an orphan, escaping on a day of religious battle, and defamation of unsuspecting believing married
omen.
َو ُهَدِھﺎَﺷ َو ُﮫَﻠِﻛ ْوُﻣو ﺎَﺑﱢرﻟا َلِﻛآ مﻠﺳو ﮫﯾﻠﻋ ُﷲ ﻰﱠﻠﺻ ِﷲ ُل ْوُﺳَر َنَﻌَﻟ ُﮫَﺑِﺗﺎَﻛ
The Prophet s.a.w. condemns those who take riba, give riba, witness to riba (transaction) and the writer of the ribatransaction.
ﱠﻣأ ُلُﺟﱠرﻟا َﺢِﻛْﻧَﯾ ْنأ ُلﺛِﻣ ﺎَھَرَﺳْﯾأ ﺎًﺑﺎَﺑ َن ْوُﻌْﺑَﺳ َوُ ﺔَﺛَﻼَﺛ ﺎَﺑﱢرﻟا ُﮫ
مِﻠْﺳُﻣﻟا لُﺟﱠرﻟا َضرﻋ ﺎَﺑﱢرﻟا ﻰَﺑ ْرأ نإ َو ,
"There are seventy three different types of riba, the least of which is equivalent to bedding one's mother, and the worst of which is equivalent to destroying the honor of a Muslim". (Narrated
by Ibn Majah and Al-Hakim).
Rationale of Prohibiting Riba
• Riba is a cause of injustice and exploitation
• Riba leads to the creation of materialistic society
• Riba discourage productive work
• Riba impedes healthy economic development (encourage security oriented rather than growth oriented)
• Riba increases the disparities in income and wealth
• Riba discourages partnership
Islam encourage trading
2. Gharar (uncertainty)
• Literally: Deceit, fraud, uncertainty, danger, peril, or hazard that might lead to destruction or loss
• Technically: any transaction of probable items whose
existence or characteristics are not certain, due to lack of information, ignorance of essential elements in the
transaction to either party, or uncertainty of the ability of one party to honor the contract
• Prohibition of gharar
– Indirect references made in the Qur’an
– Conclusively prohibited by the Sunnah of the Prophet s.a.w.
• Classical examples of gharar sale
– Sale of fish still in the sea, Sale of birds in the air, Sale of unborn animals, sale of unripen plants
– Selling non-existance goods, Short selling of stocks in capital market
3. Gambling (Maysir, Qimar )
• Maysir: easy acquisition of wealth by chance, whether or not it deprives the other’s right.
• Qimar means the game of chance in which one gains at the cost of others.
• Example: Lottery, speculation in stock markets, zero- sum-game in financial transactions
They ask you about wine and gambling. Say, "In them is great sin and [yet, some] benefit for people. But their sin is greater than their benefit." And they ask you what they should spend. Say, "The excess [beyond needs]." Thus Allah makes clear to you the verses [of revelation] that you might give thought. (Al-Baqarah: 219)
4. Selling haram (unlawful) products
• alcohol/drugs and all kinds of intoxicating product,
• bacon, gelatyn, oil, and any kind of products taken from pig.
• meet from animal that is slaughter without mentioning the name of Allah.
• Stolen items
Gainful Business in Qur’an
1.Best investment
• rahmat Allah is far better than all the riches of this world.
• Objectives of all
activities is mardhat allah (the pleasure of Allah)
• real example:
granting ease or respite one’s debtor, qard al hasan
(benevolence loan)
Sound judgment (QS7:85; 11: 85-86)
• ‘Adl (justice), full weight, full measure
• Refraining from all fraudulent practices
corrupting the land
• Preference of
thoyyib (good), halal (lawful), against
khabits (bad) and haram (unlawful)
Right conduct (QS:
33:21, 68: 3-4)
• Good deeds as real gainful investment – emulate Rasulullah SAW
• Guard trusts, keep promises, moderate in dealing with Allah as well as with fellow humans
• Wealth and children are crucial test for the integrity of man
Losing Business
All such dealing that might bring a small profit momentarily, but eventually result in a tremendous
and irreparable loss
• The worst investment: the trade that not only gains nothing but also suffers the loss (QS 2:86)
• Unsound judgement: to prefer the life of this world to that of the hereafter (31:33; 13:26)
• The evil conductinvolvement in any activity that is prohibited by Allah (QS 2:121; 2:174)
Accountability in Islam
QS 36:65; 41:18-21
Man are being vigilantly monitored and accurately recorded.
The Qur’an is very explisit in speaking about the rewards and punishments based on the conduct of man in this life.
The Qur’an Verses about Approved Business Conduct
2:275 4:29 9:119 5:1
17:34 23:8-11 17:35 7:35
55:7-9 24:37 2:280
Islamic Business Principles
Freedom of economic pursuit (QS: 4:29)
• Recognition and regard for personal property
• Allah is the absolute/ultimate owner
• However, personal ownership is not ruled out
• Legality of trade
• Qur’an envisages complete freedom of trade, internal or external
• However, it does not mean as abolition of all restrictions
• It should be ethical: honest, mutually beneficial
• Mutual consent
• Consent, concurrence, and agreement
Islamic Business Principles
Justice/Equity
• Fulfilment of promises and contracts
• Exactness in weights and measures
• Work, wages, payments
• Truthfulness, sincerity, honesty
• Efficiency and competence
• Selection on merit
• Investigation and verification
• ‘adl
Islamic Business Principles
Safeguard
•
Writing of a contract
•
Witnesses
•
Rahn
•
Individual responsibility
Islamic Business Principles
Manners
•
Politeness
•
Forgiveness
•
Compensation
•
Removal of hardships
•
Providing help
•
Consideration of others’ needs and interest
Form of Approved Business
Barter
Cash trade Credit trade
Partnership (sharikah)
Disapproved Business Conduct
Unjustified consumption of appropriation of other’s wealth and
rights
(al-bathil-unjustified consumption, zulm-
injustice)
1. Riba
Literally: increase or addition
Technically: the addition in the amount of loan in consideration of the time for which it is advancd or of the time for
which the repayment of loan is deferred
2. Fraud
• Tatfif (engaging in fraud)
• Dishonesty
• Falsehood and breach of pacts/promises
Fraud and cheating is characteristic the
of the
hypocrites
3. Other disapproved Practices
•Unjustified appropriation of
others’ wealth
Disregards for merit
Dealing in prohibited commodities
Invalid partnership
Delinquency in payment of
wages and debts Hoarding Price fization
(tas’ir) Protectionism
Monopoly Measures
causing price- hike
Infliction of harm
